Auctions With Endogenous Bidder Participation
AbstractMilgrom and Weber's General Symmetric Model of auctions is adapted to an extensive form in which seller first announces rules for an auction, then each of a pool of potential bidders makes a rational choice whether to participate, i.e., to acquire some initial information at an opportunity cost. This fundamentally changes the way choices among auction rules are analyzed; some previously central questions lose much of their relevance. If an otherwise revenue-enhancing mechanism discourages entry, then its net impact may be to reduce revenue. In this model, on average, revenue equals asset value to the winner less aggregate participation costs, for any standard auction mechanism. Seller chooses an allocatively efficient auction mechanism. A nontrival reserve price is a revenue-inferior policy; other surplus-extracting devices have switched from complements to substitutes. Underlying parameters divide into two regions: one "overattractive", the other "underattractive". All expected revenue comparisons for a fixed number of bidders carry over to the overattractive region, and all are reversed for the underattractive region. Overattractiveness characterizes any auction with sufficiently low participation costs, or sufficiently imprecise information. The paper considers extensions to multiple levels of participation costs, and to risk aversion.
Download InfoTo our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Bibliographic InfoPaper provided by University of Bonn, Germany in its series Discussion Paper Serie B with number 251.
Date of creation: Jul 1993
Date of revision:
Contact details of provider:
Postal: Bonn Graduate School of Economics, University of Bonn, Adenauerallee 24 - 26, 53113 Bonn, Germany
Fax: +49 228 73 6884
Web page: http://www.bgse.uni-bonn.de/index.php?id=517
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Lawrence M. Ausubel & Peter Cramton, 1998. "The Optimality of Being Efficient," Papers of Peter Cramton 98wpoe, University of Maryland, Department of Economics - Peter Cramton, revised 18 Jun 1999.
- Ausubel, Lawerence M. & Cramton, Peter, 1998. "The optimality of being efficient : designing auctions," Policy Research Working Paper Series 1985, The World Bank.
- Lawrence M. Ausubel & Peter Cramton, 1995. "Demand Reduction and Inefficiency in Multi-Unit Auctions," Papers of Peter Cramton 98wpdr, University of Maryland, Department of Economics - Peter Cramton, revised 22 Jul 2002.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (BGSE Office).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.